Alibaba May Acquire Pakistani Rocket Internet Ecommerce Startup Daraz
Is it coincidence that Alibaba’s interest in Pakistan comes when Beijing has financed Pakistani infrastructure projects worth about $60 billion as part of Chinese Belt and Road trade initiative?
Alibaba Group may just end up acquiring Rocket Internet’s online retail company in Pakistan. Analysts keeping an eye on the development opine that the move were it to come to fruition, would aid China’s and one of the world’s largest companies, to increase its influence in Pakistan.
Daraz.pk is an ecommerce platform launched in 2012 by Farees Shah and Muneeb Maayr that provides branded products for men and women across clothing, footwear, apparel, jewelry and accessories.
PakWired says the value of the deal were it to take place could be $100 to $150 million.
However Bloomberg reports that the parties concerned are in private discussions to sort out purchase details for Daraz. Discussions are said to be at a nascent stage, and no feedback on the development has been volunteered by either Alibaba or Daraz officials.
Alibaba’s Ant Financial had already decided to acquire a 45 percent share of Telenor Microfinance Bank, a subsidiary of Telenor Group, for $184.5 million in March 2018 to promote the use of mobile payment and digital financial services in Pakistan home to a population exceeding 200 million. In other parts of Asia, Alibaba is getting ready for battle as Singapore, already the home of Amazon operations and Shopee, sees these ecommerce companies working hard to acquire customers.
Pakistan has a fast growing youthful population which has made the country one of the fastest growing retail markets, both online and offline, in the world. Given the rise in disposable income, Pakistan’s retail market is set to grow 8.2 percent a year between 2016 and 2021 according to research group Euromonitor International.
According to Pakistani media outlet PakWired, Daraz has customers in Pakistan, Bangladesh, Myanmar, and Sri Lanka (even Nepal); it’s a market worth $610 billion. Daraz is one of the leading and most popular startups in Pakistan and has so far raised $55.6 million and lists two investors on Crunchbase - Singapore based Asia Pacific Internet Group (a joint venture between Rocket Internet and Qatari telecom company Ooredoo) and UK’s CDC Group. It’s the UK’s Development Finance Institution (DFI) wholly owned by the UK Government’s Department for International Development (DFID).
Pakistan is home to 30 million active Internet users, and most companies are tuning towards ecommerce, Daraz had said in a statement according to Bloomberg. It couldn’t be a coincidence that Alibaba’s interest in Pakistan comes at a time when Beijing has financed infrastructure projects worth about $60 billion in Pakistan in line with Chinese President Xi Jinping’s Belt and Road trade initiative.
China has also invested in Sri Lanka and Bangladesh to develop logistics, rail and road lanes in these two South Asian countries.
The Belt and Road Initiative is also known as the Silk Road Economic Belt and the 21st-century Maritime Silk Road; the One Belt and One Road Initiative; and The Belt and Road. It’s an economic strategy by the Chinese government that focuses on developing connectivity and cooperation between Eurasian countries, primarily the People's Republic of China, the land-based Silk Road Economic Belt and the ocean-going Maritime Silk Road. Through this initiative China hopes to play a larger role in global affairs which could benefit China. The initiative was presented by Xi Jinping in 2013.
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